Global supply chain disruptions continue due to COVID-19

The Institute for Supply Management (ISM) has released its second wave of research on COVID-19 impacts on businesses and their supply chains. Insights reflect input gathered by ISM primarily from U.S.-based respondents between March 17 and March 30.

Overall, response to the coronavirus is expected to substantially diminish organizational revenue and capital expenditures as impacts start to solidify within more organizations. Survey results note that almost half (47%) of respondents report reduced revenue targets of 22% on average, with 36% reporting a 27% reduction, on average, in capital expenditure plans. However, the food, beverage, and tobacco manufacturing industry expects increasing revenue of +8.8%.

“Domestic and global companies are in the midst of rapid shifts in supply chain planning, operations, and inventory management to address coronavirus impacts,” said Thomas W. Derry, CEO of ISM, in a press release. “The data suggests that even as companies adjust to supply disruptions—even anticipating normalizing supply conditions by the third quarter—they are expecting lower aggregate demand this year, which promises to be the most long-lasting impact of the virus outbreak.”

In early March, more than 80% believed their organization would experience some impact due to COVID-19 disruptions. By the end of March, this increased to 95% of organizations that will be or have already been impacted by coronavirus supply chain disruptions.

Severe supply chain disruptions were experienced in multiple regions to varying degrees. In early March, 6% reported severe disruptions across their supply chains generally. By the end of March, severe disruptions were being reported in North America (9% for U.S. supply chains, 6% for supply chains elsewhere in North America), Japan and Korea (by 17% of respondents for each), Europe (by 24% of respondents), and particularly China (by 38% of respondents).

“We’re seeing further feedback that organizations who diversified their supplier base after experiencing tariff impacts are potentially more equipped to address the effects of COVID-19 on their supply chains,” said Derry.